i'm melissa lee. we're live from the nasdaq markets. we have a big show on-deck for you. here's what's coming up. >> is there a doctor in the house? or at least a chartist carter puts br s bristol-myers the microsoft. then, microsoft, apple, google, and amazon the quadfecta. plus, we're going to keep running with that second sports

theme. mikey versus nike. what you need to know to outpace the company's quarterly report, next week. it's time to risk less and make more "options action" starts now. the focus on wall street, as lawmaker s grapple with the bes prices forward there's another in health care, that could be a breakout carter is going to break it down for us >> i thought we would look at bristol myer i thi the orange line is bristol-myers, relative to its peers. and some extend, bristol-myers overshoots/undershoots it's this divergence of late, that is appealing to me and how a stock is behaving day-to-day

you are going up more to 1990. now, zero in on this and look at the spread over the past three years, again, sector up 27. bristol-myers down 18. bottom-fishing is not good it's usually dangerous but if a stock reverses this, it is interesting lagging dramatically, and day-to-day, i want to show you the following. here's bristol on top. and here's bristol's relative performance to the sector. if i put in this line, what you will see is something very precise. it has failed at this line failed at this line. failed at this line. and now, it's pushed through we have broken through, meaning relative outperformers for the first time in a long time. a big long-term outperformance, then, underperformance then, starting to come to life let's look at the chart itself and i think at a minimum, we

simply get back to trend that would take you here we simply have a continuation of this current run, that would give you a 10% move. stock closed around 50, targeting 55, that's the trend >> all right, carter come on back mike, what's the trade, in your view >> yeah. this is one of the situations where there's probably a lot of points that folks that are interested to look at value stocks might have been tempted to get long on this thing. it is trading about 11 1/2 it looked cheap for all of the cli clients we've seen i think the thing you want to do here is straightforward. i was looking out to december. i was looking over to the 50 calls. those were slightly in the money. the stock was trading about 50 1/2 or a little higher at the

time 50 cents of value that we're looking at the idea is, when you're looking at an expiration, when you are targeting a move up to 55 bucks. you don't want to buy the 55 calls. you're in a situation, that traders want stocks to run to the long strikes and the short strikes. there's the 2 1/2 or the 50s we elected to go with the 50s, risking 50% of the stock price to make that bet if it turns out this is not actually a rebound, you're going to be risking a small amount >> the stock has had a rally this is a stock that's been in a downtrend. this one is out of favor this one is. and mike just talked to valuati valuation, the chart set up for that move. i think this is a really good example of just buying a call that's already in the money

here you're risking that $2.50 in premium, which is what you would be risking if you just bought the stock right here but that's it. and you don't risk the id oyoe swe sin i like the risk/reward if you get the move that carter thinks and people start looking at pharma stocks that are trading below market, i think the trade works out. this is a way to trade theidea >> independent of this particular call for bristol, health care is quite strong. best sector on the day and the top three performers in the dow jones industrial average, were health care stocks i think there's going to be a shift into this area generally and bristol has been such a laggard. the key to bottom fishing is you want it to start to work we're not finding something that's down and down >> a sign of life. >> it's time to turn and

outperform >> the final thing i would say, is often when you've seen stocks that have declines, one of the options prices is they will get higher and higher. lower prices core respo s corre higher volatility. this is a steady decline and this is a steady stock this is a situation where option particularly elevated. we don't need to be particularly creative to make our bullish bet here check out shares of amazon the second "a" in dan's market here dropping 2% today. down 9% since the disappointing report in july it could get much worse. how much worse >> this is a good example i'm going to put together the technicals and the fundamentals. i did a trade on microsoft two weeks ago, apple and last week, a trade on

alphabet, which is google. i have a different picture here. those three had fundamental drivers. amazon has a fundamental driver that could take it lower the fact that stock broke but stays down, tells me it's weak to its megacap peers oop s optn it's the only technical support for it and i want to look out to the next earnings call that will be the last week in october. they told us they would do one day prime shipping they saw youtubes and retail ak tell rate. they're dealing with a higher labor cost and things dealing with that. and that chart, that's the price of options

i can't imagine they will be able to turn the spigot off on the spending theyare in-in on the one-day prime. they are not going to get off the trail for one quarter. there's risk to the quarter. that's the five-year chart it's held the long-term uptrend nicely there if you get to the near-term support. the trade to me is kind of simple of course obviously, it's risky if the stocks take off, this will be back up higher today, when the stock was trading about 17.95, you could look to november expiration, that will cut the earnings event. and by the 17.60, paying $50 for that, that's 17.10 and 15 to the downside and you risk the 50 bucks. that's a new present of the

stock price or less than that. you can make up to 12%, if the stock is down 14% over the next couple months with that catalyst to me, you know, you say to yourself, why sell that $15 -- that 10 put, i think it's massive support. i'm getting a good risk/reward i like risking 50, if this stock is down. % >> the thing i would point out about selling that put let's look at the last four quarters, we had very good news a month later, basically, for the stock. 8 1/2% decline 2.7% and 16%, were the up with-month post earnings were the last four quarters think of selling the 15 strike put. if the results are regulnegativ you're collecting $1,000 per spread, when you do that trade

that's going to mitigate a lot of the dedecay if you change your point of view, you won't be giving away as much. this gives you an opportunity to put a trade on you will have an opportunity this way >> you know, just in a word, i think the chart is ominous i mean, it is like literally hanging there by a thread. we know the priceline correlation is bearish, the relative strength is poor. and we know it is a darling. if there's trouble in paradise, this is one of the most embraced stocks in the marketplace. and i think it's a swoosh down to the june low. and you're targeting lower levels it feels like that's what's coming >> you see the path to 1500? >> we have to get to the june level first, 1672 and on from there. what it's likely to be is not slow it's likely to be quick. >> if there's a fundamental driver, look at the support levels when the fundamental story

changed, and make no mistake, it changed in the last few months we got acknowledgment of it today. this stock is going to be down, 30%, 40%, 50%, from the all-time highs. i don't know why you would think that amazon couldn't do that and don't forget, apple, also a darli darling, had a 40% peak to decline. >> if you thought it was going to get to that or through it, you wouldn't sell it just like you were saying before, you want it to go through your long strikes, your short strikes or somebody between. you're selling the 1500 because that's as bad as it can get. we're only talking about a month before they report >> look. there's always this ongoing debate the pain being felt on main street is amazon's game but amazon is not exempt from general cycles

peaks are as low as they've been >> one last point on the actual trade. when you're doing the spreads, we know that a high dollar stock like this, when you buy a $60 put, one contract can be a lot what am i trying to do here? i'm trying to alleviate the costs and target the move by selling the downside put that's consideration there check out our website, optionsaction.com. what are you waiting for i'm melissa lee. we'll be right back. see that's funny, i thought you traded options. i'm not really a wall street guy. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman? hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade

i've done all sorts of research, read earnings reports, looked at chart patterns. i've even built my own historic trading model. and you're still not sure if you want to make the trade? exactly. sounds like a case of analysis paralysis. is there a cure? td ameritrade's trade desk. they can help gut check your strategies and answer all your toughest questions. sounds perfect. see, your stress level was here and i got you down to here, i've done my job. call for a strategy gut check with td ameritrade. ♪

welcome back nike shares up 20% with the stocks closing on all-time highs, it might be time to send the sportswear giant to the bench. >> we're looking at nike we're getting to a tough price level here you pointed out, it's getting up to close to its all-time highs in conjunction with that, we're seeing that it's close to its all-time peak valuations, as well and so, looking ahead to earnings as a potential catalyst, i thought we might try to look at putting on a calendar let's look at both of these things here we are. price to earns it's trading just under 34

times. that's a higher level. there's been a few instances, where it has been higher than this but not much one of the reasons you see an expansion. we have seen better flow through to the bottom line the top line, revenue growth, impressive how it is, 7 1/2% through year, is fairly constant we have to bear that in mind, as well the stock is basically right there. just under the all-time highs. it can break out to new highs and can struggle to make it anywhere, or go lower. today, when i was looking at this, the september 27th weekly, the ones that expire next friday, you can see the 87 1/2 puts for $2.55

the idea is, if earns turn out to be a nonevent, the stock lingers here, now, we own the longer dated put at a low level. i was trying to put this trade on today i had a 45 bid in. for soem reason it didn't execute. maybe i didn't hit the trade button i'll be looking at that monday to have that for 45 cents is a good move. and it's higher than the average move 3.9 over the last eight quarters are options prices higher than what it should be, based on the movement we should be seeing >> all right, mike why don't you come on over dan, what do you think of this >> the setup is interesting. here's the stoke and now at that

nike level i think of starbucks a premium brand. and that's a stock that's down 10% from the pop it had on earnings a couple months ago this one, there's some risk to it, especially if you think about what's going on with china. there's potential for some nationalistic feelings about our products i like -- if you're bearish on it don't sell that weekly put. you may get the rejection if there's a miss and a guide down. >> carter? >> you have a common level mid-april, it hits 80. mid-july, it hits 90 the stock exhibiting poor action it should be at that level and toying with a lot of tension if the earns are going to be good

the market is saying, what's coming is not going to be good i think it fails here and has a dramatic sell-off. >> the last earning season, people thought it wasn't going to be goo and it was fine. >> in many respects, that was better than people anticipated when you have stocks that are close to their peak valuations, you have to say to yourself, what would they have to say that would get a pronounced move higher >> no slowdown in china. at least need the growth stha comes in no trouble from any other corner here's the thing i would say about this calendar spread if it's here after earnings, this could be worth 2 bucks.

four-times or five-times what you're risking what you're risking is a small fraction of the current stock price. to dan's point, if you thought this was going to fall out of bed, you want to own puts. coming up, it's been smooth sailing for travel stocks. but there's trouble brewing in paradise for one name. much more "options action" after this ♪♪ ♪♪ ♪♪

i'm not really a, i thought wall street guy.ns. what's the hesitation? eh, it just feels too complicated, you know? well sure, at first, but jj can help you with that. jj, will you break it down for this gentleman?

hey, ian. you know, at td ameritrade, we can walk you through your options trades step by step until you're comfortable. i could be up for that. that's taking options trading from wall st. to main st. hey guys, wanna play some pool? eh, i'm not really a pool guy. what's the hesitation? it's just complicated. step-by-step options trading support from td ameritrade welcome back to "options action." it's time to check some of our open trades. marriott was headed for a travel nightmare. >> it's a well-defined trend and a breaking trend this is a problem. and i think one wants to be very cautious on marriott >> given the fact that options prices are elevated a little bit, they aren't as high as i think they ought to be, given the risk factors and how much equities have been moving around i was looking at october, the 125-115 put spread you could spend $2.65 for that

>> marriott dropped 5% this week after getting hit hard on oil. mike, how are you managing this trade? >> i think we lost 75 cents or so the stock behaved poorly to me earnings on the 4th of november. if you want those, i can roll this out i think you can break lower before then. >> it's heavy. and this stock, it's a beta trade. the stock is going down, the market is going down you stay and you want to be short. >> last week, dan said alphabet could be on its way to all-time highs. >> i think this sets up as a good candidate for acall calendar i want to sellout of the money calls and put in the premium that will catch the earnings event that will be a catalyst prior to the highs when the stock was trading at

12.65 today. you can get the call calendar, paying $15 for that. >> alphabet moved around this week >> it's down $5 on a week. the spread that we're buying for an earnings event. it's down. it is doing what it wanted to do the october, short, 1300 call. you're going to be long that november and at that point, you think about, what is the setup into earnings in late october maybe i spread it and turn the call into a vertical call spread >> last week was google. this week was amazon so, you were doing maga. >> we did microsoft, three weeks, amazon. last week, google. >> all right >> slipped that in there all right. >> in order. i'm sure our astute viewers

caught that. up next, your tweets and the final call ♪♪ ♪♪ ♪♪

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td ameritrade. ♪ welcome back time for a tweet our first viewer asks, would you buy disney december $150 calls now? >> no. no, i would not. you're talking about the stock breaking out to all-time highs right now, the options market is implying a 15% probability that the stock could get above that level. i think that the stock is lower than that. would you agree? >> close to zero >> close to zero it had the epic rerating all of the netflix news since, it's been flat. there's not much catalyst that will take you that quickly to that level >> "final call" time carter, back to you. >> bristol-myers >> options in bristol are

inexpensive. just buying december calls >> yeah. my quick comment on disney, 130, that gap is really important you want to see it hold there. amazon is ominous. that does it for us on "options action. see you next friday. meantime, don't go anywhere. "mad money" starts right now - the following is a paid presentation brought to you by beach body but filmed by me on my iphone and directly from my heart. hold up. i wanna ask you a question. how do you feel when you look at yourself in the mirror? not so good. like gross. who is this person? like you know you have to do something, but it's so confusing. there's fad diets, extreme workouts, and it's working for other people but it is not working for you. you just want a system, a program that actually works. hello. that doesn't feel like punishment.